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Millionaire environmentalist Graeme Wood has lodged an application for a tourism development at the site of a former woodchip mill on Tasmania's east coast, five years after he bought it.

The Wotif founder and his then-business partner Jan Cameron bought the Triabunna mill in 2011 from the now-collapsed timber company Gunns, but the site has sat unused since.

Glamorgan Spring Bay Mayor Michael Kent confirmed the council had received an application for a $12.5 million development which includes a hotel, conference room, restaurant and units.

"It looks a bit like an eco-type set up," he told 936 ABC Radio.

"I suspect that's the start of what could become a bigger opportunity for the people of Triabunna and that part of the east coast."

The coastal town of Triabunna once thrived off logging and woodchipping but the loss of forestry jobs has left it in an economic lull.

Mr Kent said he had begun to doubt whether Mr Wood would develop the site.

"We from the council have been endeavouring to push Graeme for some time, now it's eventually happened it's the start I would believe of much bigger and better things into the future," he said.

"We will be advertising [the plans] to the general public in the next couple of weeks."

Mr Wood has been contacted for comment.

Site history will not be 'whitewashed'

The Spring Bay Mill website describes the tourism proposal as stage one, containing "unique accommodation", which will provide "a number of jobs" for the local community.

It said longevity at the site was vital for "both the development itself and for Triabunna".

It aimed to create a development which would attract people from around the world while staying true to its roots.

"The history of the site is an intrinsic part of the development; we want to celebrate it, not hide it, ignore it or try to whitewash it," it said.

"We're interested in the place itself, and the people who have been associated with it. Worldwide, there is great interest in the re-use of industrial sites — we aim to put Spring Bay Mill and Triabunna on the international map."